With 96% of votes counted, caretaker Prime Minister Mark Rutte's Liberal party (VVD) has won 41 seats in the 150-member lower house, only two more seats than the rival Labour party (PvdA).

"We won our greatest victory in history and for the second time became the largest party in the Netherlands," Rutte told supporters after Labour leader Diederik Samsom telephoned him and acknowledged his defeat, Reuters reported.

Rutte declined to say which parties he would approach as coalition partners. During the election campaign, the Liberals and Labour have played down talks of forming a coalition together.

However, the election result suggests that might be the most likely outcome due to the highly fragmented Dutch political landscape.

"VVD and PvdA could form a government with just the two of them," Andy Langenkamp, global political analyst at ECR Research and an expert on Dutch politics, told EurActiv. "During one of the last TV-debates, Rutte and Samsom looked like they were ready to govern with each other and were giving each other compliments."

"They will not have a majority in the Senate, but that doesn’t have to be a problem. The two parties can try to rely on ad hoc majorities in the Senate," Langenkamp said.

Coalition speculations

If Rutte and Samson want to have an even more comfortable majority in the House of Representatives and make things easier in the Senate, they could opt for the social-liberal party D66 as a coalition partner.

The parties would still not have a majority in the Senate (35 of the 75 seats), Langenkamp said, but D66 could act as foundation for a centrist government, as party leader Alexander Pechtold has already suggested.

"With a coalition consisting of VVD, PvdA and D66, the Netherlands will be governed by three parties which have all gained seats compared to 2010. That would be a sign of respecting the wishes of the electorate," said the political analyst.

Samsom, who's a former chief executive of a green energy company and Greenpeace activist, said on election night that the Netherlands needs a stable government "as soon as possible".

"We would like to participate in that government," Samsom said, "as long as tonight's results can be faithfully represented in the new cabinet's programme."

Samsom will probably not join a government coalition however, Langenkamp said, as he has already stated that he would only join as prime minister. Otherwise he would stay on as a representative and leader of his faction in the House.

"Only if the coalition negotiations get very grim, he could probably be convinced to become vice prime minister and accept a minister post," Langenkamp said.

Anti-EU parties suffer defeat

Rutte's minority centre-right government was toppled by the anti-EU, far-right Freedom party (PVV) led by Geert Wilders in April out of hostility to spending cuts to trim the budget deficit. PVV is set to lose half its seats compared to the last election two years ago.

Hans Vollaard, assistant professor at the Institute of Political Science at Leiden University, told EurActiv it was still "surprising" that Wilders managed to keep 13 seats given his party's shifting during the campaign and its role in bringing down the previous government. During the campaign, PVV changed focus from its traditional anti-immigration platform to the eurozone bailouts.

The other big anti-EU party on the other flank, the left-leaning Socialist party (SP), looks like it will keep its 15 seats in the Dutch parliament. However, this outcome is seen as a defeat since party leader Emile Roemer was leading the opinion polls only three weeks ago.

"The most important development is that the Dutch vote shows a pro-Europe trend. Voters appear to have given a ringing endorsement to centrist parties," Langenkamp said.

"Whatever coalition Rutte will come up with, Brussels and the rest of the EU will be pleased. It is likely that the new government will chose a more pro-European path than the previous government," Langenkamp continued.

Since the Second World War, it has sometimes taken more than three months to form a Dutch government, but as EurActiv earlier reported, this does not mean that the Netherlands is unable to make decisions at EU-level.

"Of course a new government can do that more easily, but particularly the last two years have shown that coalition parties can conclude deals particularly on EU issues so there is a kind of flexibility on EU issues in the Dutch parliament," Vollaard said.

Background

The Netherlands has held five general elections within the past 10 years. Prime Minister Mark Rutte's liberal party VVD has won the most seats in the party's history with over 40 seats in the 150-seat parliament.

Rutte's previous coalition partner, the Christian Democratic Party (CDA) has lost eight seats, down from 21 seats in 2010. This could indicate that party leader Sybrand van Haersma Buma decides to let the party be in opposition.

This election was also characterised by an unprecedented level of undecided voters until the last phase. 27% of the Dutch voters still hadn't decided where to put their cross a day before the election.

It has been an unwritten rule until the last elections that party leaders present to the Queen their preferences in a government formation. However, the parliament has recently decided no longer to involve the monarchy in the process.

Instead, it will probably be the Speaker of the House who will first contact all party leaders.

Positions

The Party of European Socialists (PES) congratulated the Dutch Labour Party (PvdA and party leader, Diederik Samsom, for their "historic gains" in yesterday’s general elections. PES PresidentSergei Stanishev stated:

“I congratulate Diederik for his outstanding achievement. Any negotiations on Government can be done by Diederik from a position of strength. PvdA’s comeback is a victory that all Europeans should hold close to their hearts. It is the definitive proof that Conservative policies, with their growth-killing austerity measures and their destructive lack of solidarity, have already reached their expiration date. Now the coalition talks must reflect this reality and ensure that the new government is built upon the foundations of progressive and social change.”

The President of the European People’s Party (EPP), Wilfried Martens, made the following comments on the events:

“The fact that the Dutch people amid the financial and economic crisis turned their back to populism is an encouraging development, also for the future of the European Union,” Martens stated.

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